TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 1237
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.... Departmental Representative for Revenue and the material on record. 2. Briefly stated, the facts relevant for disposal of these appeals are as under :- 2.1 The assessee company is in the business of providing engineering, asset management and maintenance services to hospitals, The order of assessment for Assessment Year 2014-15 was completed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dt.5.8.2016, wherein the following additions / disallowances were made :- i) U/s.14A read with Rule 8D Rs.1,40,10,214 ii) Disallowance of interest expenses Rs.2,42,92,562 2.2 Aggrieved by the aforesaid order of assessment for Assessment Year 2014-15, the assessee filed appeals before the ....
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....rned any exempted income. 4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored, 5. The appellant craves leave to add, alter, amend and / or delete any of the grounds that may be urged. 4. Grounds 1, 4 & 5, being general in nature, no adjudication is called for thereon. 5. Grounds 2 & 3 - Disallowance under Section 14A r.w. Rule 8D(2)(ii) - Rs. 1,21,36,406. 5.1 In the grounds raised (supra), Revenue assails the action of the learned CIT (Appeals) in deleting the disallowance of Rs. 1,21,36,406 made by the Assessing Officer under Section 14A r.w....
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....he disallowance to the extent of Rs. 1,21,36,406 made on account of proportionate indirect interest, cannot be upheld. The same is accordingly directed to be deleted." 5.2.3 We are in agreement with the findings of the learned CIT (Appeals) (supra) that the Assessing Officer has only made some general observations on the fund flow position; but could not point out any specific transactions OR identify any funds flow, specifically linked to diversion of interest bearing funds to share investment activity. The Assessing Officer has not controverted the assessee's stated position that it had sufficient own funds and reserves for investment in mutual funds and shares and that its interest bearing fund were specifically invested in those ....
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.... of such linkage and especially when the assessee proves otherwise, the disallowance cannot be sustained perse. The assessee in its written submission dated 26.12.2017 submitted as under: "1. Disallowance under section 14A read with Rule 8D amounting to Rs. 1,40,10,214/- During the year under question, the Appellant has earned dividend income on shares and mutual funds, which was claimed as exempt from tax under Section 10(34) and 10(35) of the Income Tax Act. Since, the investment in shares and mutual funds were made out of own funds and it requires hardly any time to maintain the investments and income received thereon, etc. Hence, no disallowance has been made under Section 14A of the Income tax Act, 1961. Howe....